The Central Bank publishes quarterly statistics on the growth in household deposits. The latest figures show that in June 2018 household deposits increased by 3.4 per cent on an annual basis.
The growth in household deposits reflects our strong and growing economy, lower unemployment and wage growth. This increase has occurred during a period of very low deposit rates. The ECB has maintained the interest rate on its main refinancing operations at zero since March 2016. In relation to household investment in the property market, the latest RTB data (Q2 2018) indicates that there has been no large scale increase in Buy to Let activity recently.
Taken together, the data do not provide evidence that low deposit rates are depressing household savings in Ireland, or encouraging a re-direction of capital into the property sector at a household level.
At a corporate level, the increasing presence of institutional funders in the property market has been well documented. Some of these investors may well be taking advantage of historically low interest rates to borrow funds on capital markets in order to invest in Irish property. There are a number of advantages of institutional investment in the housing market, not least a relative reduction in the volume of residential lending on the aggregate balance sheet of the Irish banking sector.
The main issue in the Irish housing market is a lack of supply. Private investors, whether diverting corporate or household savings into property investment or not, have a role to play helping to address this issue.